EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
THIS AGREEMENT CONTAINS PROVISIONS
RELATING TO INDEMNITY, RELEASE
OF LIABILITY AND ALLOCATION OF RISK
This Asset Purchase Agreement (the "Agreement") entered into as of the
21st day of December, 2001, by and among Xxxxxx Drilling Company, a Texas
corporation, previously known as Xxxxxx Rig 19, Inc.(the "Seller"), Xxxx X.
Xxxxxx ("Xxxx"), Crates Xxxxxxxx Capital, Inc., a Texas corporation, CT Capital
Partners, L.P., a Texas limited partnership and CT Drilling Partners, L. P., a
Texas limited partnership, as direct or indirect shareholders of the Seller
(collectively referred to herein as the "Shareholders"), Xxxxxxxxx-UTI Drilling
Company LP, LLLP, a Delaware limited liability limited partnership (the
"Purchaser"), and Xxxxxxxxx-UTI Energy, Inc., a Delaware corporation
("Xxxxxxxxx"), for the sale by Seller and the purchase by Purchaser of the
Assets described below.
WHEREAS, Purchaser is an indirect wholly-owned subsidiary of Xxxxxxxxx;
WHEREAS, the Seller is the owner of 17 land drilling rigs, and
machinery, equipment, trucks, spare parts, inventory and supplies, and related
appurtenances, (including spare components, parts, drill pipe, drill collars,
racking and other supporting stores and inventory), as more fully described in
the attached Exhibit A hereto (hereinafter collectively referred to herein as
the "Tangible Assets", but excluding the Tangible Assets listed on Schedule
10(m)), Seller is a party to the land drilling contracts listed on Exhibit B
hereto (the "Contracts"), a party to the Rig 19 Agreement dated April 9, 2001,
with EEX E&P Company, L. P., (the "Rig 19 Agreement") and owns the name Xxxxxx
Drilling Company (the Contracts together with the Drilling Contract as defined
in such agreement, the Rig 19 Agreement, the Tangible Assets and the exclusive
right to use the name Xxxxxx Drilling Company, in all cases, and the exclusive
right to all variations and derivatives thereof, in connection with any and all
business activities, related to the oil, gas or other hydrocarbon exploration,
production or processing business, including oil field services and equipment,
are hereinafter referred to as the "Assets"); and
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller the Assets under terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the above and other good and
valuable consideration, the parties mutually agree as follows:
1. Purchase Price.
a. $13,500,000 payable in cash (the "Cash Purchase Price").
b. 450,000 shares (the "Shares") of Common Stock, $.01 par value (the
"Common Stock") of Xxxxxxxxx.
c. Warrants to purchase up to an aggregate 325,000 shares of Common
Stock (the "Warrant Shares") at the initial exercise price of $ 26.75 (the
"Warrants") terminating three years after closing and having the terms and
conditions set forth in Attachment A hereto.
d. Assumption of the obligations under the promissory note (the "EEX
Note") issued pursuant to the Rig 19 Agreement as more fully described on
Schedule 1(d) and the obligations of Seller under the Contracts and the Rig 19
Agreement relating to the operation or use of the Assets after the closing of
the sale contemplated hereby (collectively, the "Assumed Liabilities"). Except
with respect to the Assumed Liabilities, the Purchaser shall not assume, and
shall be fully indemnified by Seller and the Shareholders from, any loss, cost
or expenses incurred with respect to any liability or obligation, contingent or
otherwise, of the Seller.
2. Payment of Cash Purchase Price. Xxxxxxxxx shall cause Purchaser to pay, and
Purchaser shall pay, to Seller the Cash Purchase Price on the Closing Date by
wire transfer pursuant to written instructions provided to Purchaser by Seller
two business days prior to Closing. Purchaser and Seller agree to discuss the
allocation of the Purchase Price among the Assets prior to filing a federal tax
return reflecting such allocation and agree that if they can agree on an
allocation they will so indicate in their federal tax returns.
3. Delivery of the Shares. At the Closing, Xxxxxxxxx, on behalf of the
Purchaser, shall deliver to the Seller stock certificates evidencing in the
aggregate the Shares.
4. Delivery of Warrants. At the Closing, Xxxxxxxxx, on behalf of the Purchaser,
shall deliver to Seller a Warrant covering the number of Warrant Shares.
5. Closing Date. The closing (the "Closing") shall take place on December 21,
2001, or on such earlier or later date as may be mutually agreed upon by Seller
and Purchaser, such date for closing being hereinafter referred to as the
"Closing Date". In no event shall the Closing Date fall after January 31, 2002.
6. Delivery. Purchaser inspected the Tangible Assets during the period beginning
December 18, 2001 through December 20, 2001 and agrees they are acceptable in
their condition as inspected. Except as provided on Schedule 6, the Tangible
Assets shall be delivered by Seller to Purchaser at their locations when
inspected in substantially the same condition as when inspected by Purchaser.
7. No Warranty by Seller Regarding the Tangible Assets. EXCEPT AS PROVIDED IN
SECTIONS 6 AND 8 HEREOF, THE SALE OF THE TANGIBLE ASSETS IS AS IS, WHERE IS AND
WITH ALL FAULTS OR DEFECTS, LATENT, PATENT OR OTHERWISE AND NEITHER SELLER NOR
ANY SHAREHOLDER MAKES ANY GUARANTY, WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, BY OPERATION OF LAW OR OTHERWISE, AS TO THE QUALITY, SERVICEABILITY,
MERCHANTABILITY OR CONDITION OF THE TANGIBLE ASSETS, INCLUDING BUT NOT LIMITED
TO THEIR RELATED MACHINERY, EQUIPMENT, SPARE PARTS, DRILLING RIG AND RELATED
APPURTENANCES, OR THEIR FITNESS FOR ANY USE OR PURPOSE.
8. Assumption of Risk by Purchaser/Dayrates. Purchaser specifically assumes all
risk of death, injury, loss or damage to Purchaser or any other party arising
from or relating to the use, condition or operation of the Assets after the
Closing Date. Dayrates and other benefits earned on the Contracts prior to the
Closing Date (whether or not invoiced or billed as of the Closing Date) shall be
for the benefit of Seller and dayrates and other benefits earned on the
Contracts on or after the Closing Date shall be for the benefit of the
Purchaser; any payments or other consideration received on the Contracts by
Seller or Purchaser shall be divided between Seller and Purchaser according to
these principles.
9. Risk of Loss. Title, possession and risk of loss with respect to the Assets
shall pass to Purchaser at 12:01 a.m. on the Closing Date.
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10. Representations and Warranties of Seller and the Shareholders. Seller and
the Shareholders, jointly and severally, represent and warrant as of the date
hereof and the Closing Date that:
a. Seller is a corporation duly organized and existing under the laws
of the State of Texas. Seller and each Shareholder have all necessary power and
authority to execute and deliver this Agreement and perform the transaction
contemplated herein. The execution and delivery of this Agreement, and the due
consummation of the transactions hereby authorized, have been duly and validly
authorized by Seller and each Shareholder, including any required approval of
the shareholders of Seller, and this Agreement represents a valid and binding
agreement of Seller and each Shareholder.
b. The execution and delivery of this Agreement by Seller and each
Shareholder and the consummation of the transactions hereby contemplated will
not (i) violate any provision of any of the Seller's or the Shareholders'
Articles of Incorporation, Bylaws, Limited Partnership Agreement or similar
organizational documents, or any judgment, decree, or order to which any of them
is a party, (ii) result in the breach of, or constitute a default under, any
agreement or contract to which Seller or any of the Shareholders is a party or
by which any of them or any of the Assets are bound, or (iii) constitute a
violation of any statute or law or any regulation or rule of any court or
governmental authority.
c. Except as set forth on Schedule 10(c), no consent of or filing with
U.S. governmental authorities, and no consent of or filing with any other
governmental authority or any other person or entity, is required in connection
with the execution, delivery and performance of this Agreement by any of the
Seller or the Shareholders.
d. Certain of the Assets are currently under contract to third parties
as specified in the Contracts and are being transferred by the Seller to
Purchaser subject to such Contracts.
e. Except as referred to in Sections 10(d) above or as set forth on
Schedule 10(e), Seller shall transfer to Purchaser good and marketable title to
the Assets free and clear of any liens, encumbrances, claim, security interest
or infringement of any nature whatsoever (other than customary inchoate liens
for taxes not yet due and payable).
f. Seller has full corporate power and authority to carry on its
business, to own, lease and operate its properties and to execute and deliver
this Agreement and all documents and instruments referred to herein and
contemplated hereby and to carry out the terms hereof.
g. Seller has filed all tax returns (whether federal, state, local,
income, franchise, sales, property or other tax) required to be filed on or
before the Closing Date and paid all applicable taxes (whether federal, state,
local, income, franchise, sales, property or other tax) due on or before the
Closing Date relating in any way to the Assets.
h. Except as set forth on Schedule 10(h), there is no claim,
litigation, proceeding or governmental investigation pending or, to the
knowledge of either Seller or the Shareholders, threatened against or relating
to or in any way affecting the Assets or the transactions contemplated by this
Agreement.
i. Each Seller is in compliance in all material respects with all
applicable laws and regulations relating to its ownership or operation of the
Assets, and has not received notice of any violation (that is uncured or
outstanding) of any law or regulation relating to its operation of the Assets.
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j. There have been no modifications or changes to the Assets since
Purchaser's inspection, other than as a result of routine maintenance.
k. Seller has provided to Purchaser true, correct and complete copies
of the Contracts and the Rig 19 Agreement. Seller is not in default under any of
the Contracts or the Rig 19 Agreement, and to the Seller's and the Shareholders'
knowledge, no other party to any of the Contracts or the Rig 19 Agreement is in
default under any of the Contracts or the Rig 19 Agreement. The Contracts and
the Rig 19 Agreement are the only contracts, agreements or understandings,
whether written or oral, that apply to the ownership or operation of the Assets.
Schedule 1(d) sets forth as of the date of this Agreement the amount of
principal and interest owing under the promissory note issued pursuant to the
Rig 19 Agreement. EEX E&P Company, L.P. ("EEX") has consented to the assignment
by the Seller of the Rig 19 Agreement to Purchaser and to the assignment of
Drilling Contract as defined in the Rig 19 Agreement to the Purchaser.
l. Seller is now solvent, and Seller will not be rendered insolvent by
the occurrence of the transactions contemplated by this Agreement. In addition,
immediately after giving effect to the consummation of the transactions
contemplated by this Agreement, (i) Seller will be able to pay its debts as they
become due, (ii) the property of Seller does not and will not constitute
unreasonably small capital, and Seller will not have unreasonably small capital,
and Seller will have sufficient capital with which to conduct its business
and/or to wind up its affairs and dissolve, and (iii) there will be no pending
or threatened litigation or final judgments against Seller in any action for
money damages that is reasonably anticipated to be rendered at a time when, or
in amounts such that Seller will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered). The cash available
to Seller, after taking into account all other anticipated uses of the cash of
Seller, will be sufficient to pay all such judgments promptly in accordance with
their terms to the extent such judgments, if any, are in excess of available
insurance proceeds. As used in this Section, "insolvent" means, for any person
or entity, that the sum of the present fair saleable value of its assets does
not and/or will not exceed its debts and other probable liabilities, and the
term "debts" includes any legal liability, whether matured or unmatured,
liquidated or unliquidated, absolute, fixed or contingent, disputed or
undisputed or secured or unsecured.
m. Except as set forth on Schedule 10(m), (i) the Assets constitute the
entire operating assets used by the Seller in connection with each of the
drilling rigs being sold and Seller maintains separately for each rig accounting
records of income and expenses for the operation of each rig, (ii) the Assets
constitute the entire operating assets used by the Seller in connection with its
contract drilling service business, and (iii) the Seller owns no other assets
other than the Assets, cash, accounts receivable and prepaid items and interests
in real property. Except as set forth on Schedule 10(m), neither Xxxx, nor any
of his family members nor any of his affiliates, has any assets or interest in
any assets used in the land drilling rig business other than the Assets and
interest in real property.
n. Seller is the successor in interest to all of the assets and
operations of Xxxxxx Operating Company, formerly a Texas Corporation, Xxxxxx
Drilling Company, formerly a Texas Corporation and Xxxxxx Rig 19, Inc., a Texas
Corporation by reason of the merger of Xxxxxx Operating Company and Xxxxxx
Drilling Company into Seller on December 21, 2001. All of the assets of KAC
Equipment Leasing, Inc. shown on Schedule 10(n) were transferred to Xxxxxx
Drilling Company prior to Xxxxxx Drilling Company's merger into Seller. Except
for the San Xxxxxx yard, the assets listed on Schedule 10(n) represent all of
the land drilling business assets of KAC Equipment Leasing, Inc.
11. Representations and Warranties of Purchaser. Purchaser and Xxxxxxxxx,
jointly and severally, represent and warrant as of the date hereof and the
Closing Date that:
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a. Purchaser is a limited liability limited partnership duly organized
and validly existing under the laws of the State of Delaware. Xxxxxxxxx is a
corporation duly organized and validly existing under the laws of the State of
Delaware. The execution and delivery of this Agreement, and the due consummation
of the transactions hereby authorized, have been duly and validly authorized by
the Purchaser and by Xxxxxxxxx, and this Agreement represents a valid and
binding agreement of Purchaser and Xxxxxxxxx.
b. The execution and delivery of this Agreement and the consummation of
the transactions hereby contemplated by Purchaser or Xxxxxxxxx will not (i)
violate any provision of Purchaser's Certificate of Limited Liability Limited
Partnership or Limited Liability Limited Partnership Agreement or Xxxxxxxxx'x
Certificate of Incorporation or Bylaws, or any judgment, decree, or order to
which Purchaser or Xxxxxxxxx is a party, (ii) result in the breach of, or
constitute a default under, any agreement or contract to which Purchaser or
Xxxxxxxxx is a party or by which Purchaser or Xxxxxxxxx is bound, or (iii)
constitute a violation of any statute or law or any regulation or rule of any
court or governmental authority.
c. Except for advance notice to Xxxxxxxxx'x lenders under Xxxxxxxxx'x
credit facility, no consent of or filing with U.S. governmental authorities, and
no consent of or filing with any other governmental authority or any other
person or entity, is required in connection with the execution, delivery and
performance of this Agreement by Purchaser or Xxxxxxxxx.
d. The Shares when issued pursuant to this Agreement and the Warrant
Shares when issued pursuant to the Warrant will be validly issued, fully paid
and nonassessable and the Warrant, when executed and delivered pursuant to this
Agreement, will be a valid and legally binding agreement of Xxxxxxxxx and
Xxxxxxxxx will have reserved for issuance the shares of Common Stock issuable
upon exercise of the Warrants.
x. Xxxxxxxxx has made available to the Seller and the Shareholders its
annual report on Form 10-K for the year ended December 31, 2000, Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2001, June 30, 2001 and
September 30, 2001, its current reports on Form 8-K dated July 23, 2001, May 8,
2001, April 23, 2001, March 27, 2001, February 16, 2001 and February 6, 2001,
and its proxy statement/prospectus with respect to its Special Meeting of
Stockholders held on May 8, 2001 (such documents collectively referred to herein
as the "SEC Documents"). As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of the respective
date of filing with the Commission, the consolidated financial statements of
Xxxxxxxxx included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, were prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly presented the consolidated
financial position of Xxxxxxxxx and its consolidated subsidiaries as of the
dates of such financial statements and the consolidated results of their
operations and cash flows for the periods then ended. Since September 30, 2001,
other than a discussed in the SEC Documents or publicly announced by Xxxxxxxxx,
there has been no material adverse change in the business of Xxxxxxxxx and its
subsidiaries, taken as a whole.
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12. Accredited Investor; Investment Purpose.
a. Seller and each Shareholder recognizes and understands that the
Shares and the Warrants and the Common Stock issuable upon exercise of the
Warrants will not be registered under the Securities Act, or under the
securities laws of any state (the "Securities Laws"). The Shares, the Warrants,
and the Common Stock issuable upon exercise of the Warrants (collectively, the
"Securities") are not being so registered in reliance upon exemptions from the
Securities Act and the Securities Laws that are predicated, in part, on the
representations, warranties and agreements of the Seller and the Shareholders
contained herein.
b. Seller and each Shareholder represents and warrants that (i) Seller
or such Shareholder is an "accredited investor" within the meaning of Regulation
D promulgated by the Commission pursuant to the Securities Act and is not
relying on a financial advisor in connection with his, her or its participation
in the transactions contemplated hereby in connection with evaluating the merits
and risks of this Agreement, the transactions contemplated hereby and an
investment in the Securities and the suitability thereof as an investment
therefor, (ii) Seller or such Shareholder has such knowledge and experience in
financial, investment and business matters, such experience being based on
actual participation therein, that Seller or such Shareholder is capable of
evaluating the merits and risks of this Agreement, the transactions contemplated
hereby and an investment in the Securities and the suitability thereof as an
investment therefor, (iii) the Securities will be acquired for Seller's or such
Shareholder's own account solely for investment and not with a view toward
resale or redistribution in violation of the Securities Laws, (iv) Seller or
such Shareholder has reviewed Seller's or such Shareholder's financial condition
and commitments, and Seller or such Shareholder has adequate means to provide
for Seller's or such Shareholder's financial needs and possible contingencies,
has no present or existing or contemplated future need to dispose of all or any
portion of Seller's or such Shareholder's interest in the Securities to satisfy
any existing or contemplated undertaking, need or indebtedness, and has assets
or sources of income that, taken together, are more than sufficient so that
Seller or such Shareholder can bear the risk of the loss of his, her or its
entire investment in the Securities, (v) Seller or such Shareholder has no plan
or intention to sell, exchange or otherwise dispose of his, her or its interest
in the Securities except in compliance with applicable securities laws, (vi)
each Shareholder who is a natural person has his residences and domicile in the
State of Texas and (vii) in connection with the transactions contemplated
hereby, no assurances have been made concerning the future results of Xxxxxxxxx
or as to the value of the Securities. Seller and each Shareholder understands
that Seller or such Shareholder must bear the economic risks of Seller's or such
Shareholder's investment in the Securities for an indefinite period of time.
Seller and each Shareholder understands that, except as provided in Section 13
hereof, Xxxxxxxxx is under no obligation to file a registration statement or to
take any other action under the Securities Laws with respect to any Securities.
c. Seller and each Shareholder has consulted with Seller's or such
Shareholder's own counsel in regard to the Securities Laws and is fully aware
(i) of the circumstances under which Seller or such Shareholder is required to
hold the Securities, (ii) of the limitations on the transfer or disposition of
the Securities, (iii) that the Securities must be held indefinitely unless the
transfer thereof is registered under the Securities Laws or an exemption from
registration is available and (iv) that no exemption from registration is likely
to become available for at least one year from the date of acquisition of the
Securities. Seller and each Shareholder has been advised by Seller's or such
Shareholder's counsel as to the provisions of Rule 144 as promulgated by the
Commission under the Securities Act and has been advised of the applicable
limitations thereof. Seller and each Shareholder acknowledge that Purchaser and
Xxxxxxxxx are relying upon the truth and accuracy of the representations and
warranties in this Section by Seller or such Shareholder in consummating the
transactions contemplated by this Agreement without registering the Securities
under the Securities Laws.
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x. Xxxxxxxxx has made available to Seller and each Shareholder the SEC
Documents and a summary description of the terms of the Xxxxxxxxx Common Stock.
Seller and each Shareholder has reviewed copies of the SEC Documents and such
summary description (all such written materials, including this Agreement and
the Exhibits, Annexes and Schedules hereto, are hereinafter referred to as the
"Disclosure Information") and no person has made any representations or
warranties of any kind or nature to induce Seller or such Shareholder to enter
into this Agreement except as set forth in the written Disclosure Information,
and Seller or such Shareholder is relying only upon the Disclosure Information
in determining whether to make an investment in the Securities. Xxxxxxxxx and
Purchaser have offered to make available to Seller and each Shareholder upon
request at any time all exhibits filed by Xxxxxxxxx with the Commission as part
of any of the reports filed therewith.
e. Seller and each Shareholder has made an independent investigation of
the pertinent facts relating to the transactions contemplated hereby, has
reviewed carefully the terms of this Agreement and the information furnished to
Seller or such Shareholder (including the Disclosure Information) to the extent
he, she or it deems necessary to be fully informed with respect thereto and
understands the nature of an investment in the Securities.
f. Seller and each Shareholder agrees that the instruments representing
any of the Securities will be imprinted with the following legend, the terms of
which are specifically agreed to:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR
THE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON EXEMPTIONS FROM
REGISTRATION REQUIREMENTS. WITHOUT SUCH REGISTRATION, SUCH SHARES
[WARRANTS] MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED FOR SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, PLEDGE,
HYPOTHECATION OR TRANSFER SHALL NOT BE IN VIOLATION OF THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS OR ANY
RULE OR REGULATION PROMULGATED THEREUNDER. NOTWITHSTANDING THE
FOREGOING, THE SHARES MAY BE PLEDGED TO SECURE A BONA FIDE FULL
RECOURSE LOAN FROM A PERSON IN THE BUSINESS OF MAKING SUCH LOANS
THAT ACCEPTS SUCH PLEDGE SUBJECT TO THE FOREGOING RESTRICTIONS ON
TRANSFER.
13. Registration Rights. (a) Subject to Section 16, on one and only one occasion
no sooner than six months following the Closing Date (the "Demand Date"), the
Holders (as hereinafter defined) may request (a "Demand Request"), pursuant to
this Section 13, that Xxxxxxxxx register under the Securities Act all or part of
the Registerable Securities (as hereinafter defined) for sale on a continuous
basis from time to time in the open market through brokers or dealers, or
otherwise, by a Holder, a pledgee of a Holder and any counterparty to any
hedging arrangement or agreement entered into by a Holder, having a period of
distribution not to exceed 20 days, and Xxxxxxxxx, subject to the terms and
conditions hereof, shall be obligated to effect such registration pursuant to
the terms of this Agreement; provided, however, Xxxxxxxxx shall not be obligated
to prepare and file any registration statement pursuant to this Section 13, or
prepare or file any amendment or supplement thereto, and may suspend sales
thereunder, if at any time when Xxxxxxxxx reasonably believes that the filing
thereof at the time requested, or the offering of securities pursuant thereto,
would materially and adversely affect a pending or proposed public offering of
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securities of Xxxxxxxxx, or an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction relating to Xxxxxxxxx or
negotiations, discussions or pending proposals with respect thereto, or require
premature disclosure of information not otherwise required to be disclosed to
the potential detriment of Xxxxxxxxx or require the preparation or disclosure of
financial information of Xxxxxxxxx or a third party not reasonably available to
Xxxxxxxxx; provided, however, that such period of sale or distribution shall
resume after any such suspension for a number of days necessary to keep such
registration statement effective for permitted sales thereunder for a term of 20
days. The filing of a registration statement, or any amendment supplement
thereto, by Xxxxxxxxx may not be deferred, and the sale and distribution of
shares may not be suspended, in each case pursuant to the foregoing provisions,
for more than 60 days after the abandonment or consummation (or the completion
of the distribution of securities in the case of a public offering) of any of
the proposals or transactions described herein or, in any event, for more than
120 days. In addition, notwithstanding anything contained herein to the
contrary, Xxxxxxxxx shall be under no obligation to register any Registerable
Securities pursuant to this Section 13 unless a minimum of 100,000 Registerable
Securities (subject to proportionate adjustment upward or downward, as
applicable, in the event of any stock split or stock dividend) are requested to
be registered and the Holders requesting such registration have a good faith
intent at the time of such request to sell all Registerable Securities requested
to be registered. The Demand Request must be signed by the Holders of
Registerable Securities and must include with it an election to exercise all
Warrants then held by any Person exercising registration rights hereunder which
shall be subject only to the registration of the Warrant Shares subject to such
Warrants.
(b) Certain Definitions Applicable to Section 13. When used in this
Section 13, the following terms shall mean as follows:
i. "Holder" shall mean (A) the Seller, (B) either Shareholder,
(C) any direct or indirect partner of CT Drilling Partners, L.P. or CT Capital
Partners, L.P. to which Registerable Securities are distributed and (D) any
person that acquires Registerable Securities upon exercise of Warrants.
ii. "Registerable Securities" shall mean (A) Warrant Shares
issuable upon exercise of a Warrant which has not been exercised at the time of
the Demand Request, and (B) any shares of Xxxxxxxxx Common Stock issued in
respect of the shares described in clause (A) or into which such shares
described in clause (A) shall have been changed or converted. As to any
particular Registerable Securities, once issued such Securities shall cease to
be Registerable Securities when (v) based on an opinion of counsel reasonably
acceptable to Xxxxxxxxx and the Holders' Representative, all such Securities are
immediately eligible for sale pursuant to Rule 144 under the Securities Act, (w)
such Securities have been sold pursuant to Rule 144, (x) a registration
statement with respect to the sale of such Securities shall have become
effective under the Securities Act and such Securities shall have been disposed
of in accordance with such registration statement, (y) such Securities shall
have been otherwise transferred, new certificates for such Securities not
bearing a legend restricting further transfer shall have been delivered by
Xxxxxxxxx and subsequent disposition of such Securities shall not require
registration or qualification of such Securities under the Securities Act or any
state securities or blue sky law then in force or (z) such Securities shall have
ceased to be outstanding.
14. Registration Procedure. If and whenever Xxxxxxxxx is required by the
provisions of Section 13 to effect the registration of any Registerable
Securities under the Securities Act, Xxxxxxxxx will, subject to the other
provisions of Section 13; provided that such registration will include a "Plan
of Distribution" section covering sales in ordinary market transactions and
typical hedging transactions:
a) as expeditiously as reasonably practicable, prepare and file with the
Commission the registration statement in which such Registerable
Securities are to be included and seek to cause such registration
statement to become and remain effective;
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b) as expeditiously as reasonably practicable, prepare and file with the
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act in accordance with the
intended method of distribution set forth in such registration
statement;
c) as expeditiously as reasonably practicable, furnish to Holders who have
Registerable Securities covered by such registration statement such
number of copies of prospectuses and preliminary documents as such
Holder may reasonably request, in order to facilitate the public sale
of such Registerable Securities; provided, however, that the obligation
of Xxxxxxxxx to deliver copies of prospectuses or preliminary
prospectuses to a Holder shall be subject to the receipt by Xxxxxxxxx
of reasonable assurances from such Holder that such Holder will comply
with the applicable provisions of the Securities Act and of such other
securities laws as may be applicable in connection with any use by such
Holder of any prospectuses or preliminary prospectuses;
d) as expeditiously as practicable, use its reasonable best efforts to
register or qualify the Registerable Securities covered by such
registration statement under such other securities laws or such United
States jurisdictions as Holders who have Registerable Securities
covered by such registration statement shall reasonably request
(considering the nature and size of the offering) and do any and all
other acts and things that may be necessary or desirable to enable such
Holder to consummate the public sale or other disposition in such
jurisdictions of such Registerable Securities; provided, however, that
Xxxxxxxxx shall not be required to qualify to transact business as a
foreign corporation in any jurisdiction in which it would otherwise not
be required to be so qualified or to take any action that would subject
it to general service of process in any jurisdiction in which it is not
then so subject or subject it to franchise or other taxes in any state
or jurisdiction in which it is not then so subject to taxes;
e) bear all Registration Expenses (as defined below) in connection with
all registrations hereunder; provided, however, that all Selling
Expenses (as defined below) and all fees and disbursements of counsel
for any Holder in connection with each registration pursuant to Section
13 shall be borne by such Holder. Expenses incurred by Xxxxxxxxx in
complying with Section 13, including: (i) all registration and filing
fees; (ii) all printing expenses; (iii) all fees and disbursements of
counsel for Xxxxxxxxx; (iv) all blue sky fees and expenses; and (v) all
fees and expenses of accountants for Xxxxxxxxx, are herein referred to
as "Registration Expenses". All underwriting fees and discounts and
brokerage and selling commissions relating to Registerable Securities
to be registered for any Holder and fees and expenses of the counsel
for such Holder and any other costs (other than Registration Expenses)
applicable to the sales by such Holder in connection with any such
registration are herein referred to as "Selling Expenses".
15. Securities Indemnification.
a) In the event of a registration of any Registerable Securities under the
Securities Act pursuant to Section 13, Xxxxxxxxx will indemnify and
hold harmless each Holder who has Registerable Securities covered by
such registration statement and any other Person, if any, who controls
such Holder within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities, joint or several,
to which such Holder or such controlling Persons may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities or actions in respect thereof arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective
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date thereof, in any registration statement under which such
Registerable Securities were registered under the Securities Act, any
preliminary prospectus distributed with the consent of Xxxxxxxxx or
final prospectus contained in such effective registration statement, or
any amendment thereof or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such Holder and each such
controlling Person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that
Xxxxxxxxx will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, such preliminary
prospectus, such final prospectus or such amendment or supplement, in
reliance upon and in conformity with written information furnished to
Xxxxxxxxx by or on behalf of such Holder or a controlling Person of
such Holder specifically for use in the preparation thereof.
b) In the event of any registration of any Registerable Securities under
the Securities Act pursuant to Section 13, each Holder who has
Registerable Securities covered by such registration statement will
indemnify and hold harmless Xxxxxxxxx and each Person, if any, who
controls Xxxxxxxxx within the meaning of Section 15 of the Securities
Act, each officer of Xxxxxxxxx who signs the registration statement,
each director of Xxxxxxxxx and each underwriter and each Person who
controls any underwriter within the meaning of Section 15 of the
Securities Act, against any and all such losses, claims, damages,
liabilities or actions that Xxxxxxxxx or such officer, director,
underwriter or controlling Person may become subject under the
Securities Act or otherwise, and will reimburse Xxxxxxxxx and each such
officer, director, underwriter and controlling Person for any legal or
any other expenses reasonably incurred by such party in connection with
investigating or defending any such loss, claim, damage, liability or
action, if (a) such loss, claim, damage, liability or action in respect
thereof arises out of or is based upon any untrue statement or alleged
untrue statement of any material fact with respect to such Holder
contained in any such registration statement, such preliminary
prospectus or such final prospectus, or any amendment thereof or
supplement thereto, or arises out of or is based upon the omission or
alleged omission to state therein a material fact with respect to such
Holder required to be stated therein or necessary to make the
statements therein not misleading, and (b) any such untrue statement or
omission of a material fact was made in reliance upon and in conformity
with written information furnished to Xxxxxxxxx by or on behalf of such
Holder specifically for use in connection with the preparation of such
registration statement or prospectus or failure to deliver required
prospects or otherwise comply with applicable laws regarding same.
c) Promptly after receipt by any indemnified Person of notice of any claim
or commencement of any action in respect of which indemnity is to be
sought against an indemnifying Person pursuant to Section 15, such
indemnified Person shall notify the indemnifying Person in writing of
such claim or of the commencement of such action, and, subject to
provisions hereinafter stated, in case any such action shall be brought
against an indemnified Person and such indemnifying Person shall have
been notified of the same, such indemnifying Person shall be entitled
to participate therein, and, to the extent it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to such
indemnified Person, and after notice from the indemnifying Person to
such indemnified Person of its election to assume the defense thereof,
such indemnifying Person shall not be liable to such indemnified Person
for the fees and expenses of legal counsel for such indemnified Person
incurred thereafter in connection with the defense thereof; provided,
however, if there exists or will exist a conflict
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of interest that would make it inappropriate in the reasonable
judgement of the indemnified person for the same counsel to represent
both the indemnified Person and such indemnifying Person, then such
indemnified Person shall be entitled to retain it own counsel at the
expense of such indemnifying Person; provided further, however, the
indemnifying Person shall not be required to pay for more than one
separate counsel for all of the indemnified Persons in addition to any
local counsel.
16. Termination of Registration Rights. The rights of Holders as to registration
of the Registerable Securities provided herein, shall terminate as to the
Registerable Securities as follows:
a) registration rights shall terminate as to any of such Registerable
Securities at such time as they may be sold without registration and
without limitation as to volume pursuant to Rule 144 promulgated under
the Securities Act; and
b) the registration rights provided in this Agreement shall terminate as
to all Registerable Securities, if Xxxxxxxxx, within 10 trading days of
receipt of the Demand Request notifies the Holders of the Warrants to
be exercised in connection with such Demand Request that Xxxxxxxxx will
permit a net exercise of such Warrants and in fact allows such a net
exercise at the written request of such Holder within 15 trading days
of receipt of the Demand Request, whether or not such Holder makes such
request. For purposes hereof, a "net exercise" means an exercise of a
Warrant pursuant to which the holder directs Xxxxxxxxx to retain from
the Warrant Shares to be issued upon exercise of the Warrant a number
of Warrant Shares having a fair market value equal to the Warrant
exercise price for all the Warrant Shares as to which such exercise is
being requested such that the holder of the Warrant pays no cash upon
exercise of the Warrant but receives a reduced number of Warrant
Shares. For purposes of such net exercise, the fair market value of the
Warrant Shares shall be the daily average of the closing price for the
Common Stock on its principal trading exchange or market for the 10
trading days beginning on the date the Demand Request is received by
Xxxxxxxxx. For purposes hereof, a trading day shall be a day on which
the exchange or market on which the Common Stock is traded is open for
trading.
17. Survival. The warranties and representations of Seller and Shareholders on
the one hand and Purchaser and Xxxxxxxxx, on the other, contained in this
Agreement shall survive the Closing Date or termination of this Agreement
without limitation. All covenants and agreements contained herein shall survive
without limitation. Any claim for indemnification made during the survival
period shall be valid and the representations and warranties relating thereto
shall remain in effect for purposes of such indemnification notwithstanding that
such claim may not be resolved within the survival period. All representations,
warranties and covenants and agreements made by the parties shall not be
affected by any investigation heretofore or hereafter made by and on behalf of
any of them and shall not be deemed merged into any instruments or agreements
delivered in connection with this Agreement or otherwise in connection with the
transactions contemplated hereby.
18. Liability, Indemnity and Allocation of Risk Provisions. Seller and
Shareholders, on the one hand, and Purchaser, on the other hand, further agree
that:
a. Seller's and Shareholders' Indemnity: SELLER AND SHAREHOLDERS, JOINTLY
AND SEVERALLY, AGREE TO BE RESPONSIBLE FOR AND HOLD HARMLESS AND INDEMNIFY
PURCHASER AND XXXXXXXXX AND THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, SHAREHOLDERS, PARTNERS, EMPLOYEES AND AGENTS (COLLECTIVELY,
"PURCHASER INDEMNIFIED PARTIES") FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF
ACTION, DAMAGES, JUDGMENTS AND AWARDS OF ANY KIND OR CHARACTER, INCLUDING FINES
AND PENALTIES (COLLECTIVELY, THE "CLAIMS"), ARISING FROM OR RELATING TO ANY
BREACH OR VIOLATION OF THE
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REPRESENTATIONS, WARRANTIES OR COVENANTS MADE BY SELLER OR SHAREHOLDERS
CONTAINED IN THIS AGREEMENT, OR IN ANY CERTIFICATE, AGREEMENT, DOCUMENT OR
INSTRUMENT DELIVERED BY SELLER PURSUANT TO THIS AGREEMENT OR THE OWNERSHIP, USE
OR OPERATION OF THE ASSETS OR THE BUSINESS OF SELLER OR OBLIGATIONS OF SELLER TO
ITS EMPLOYEES ON OR BEFORE THE CLOSING DATE, EXCEPT TO THE EXTENT ANY SUCH CLAIM
ARISES FROM OR IS RELATED TO THE OWNERSHIP OR OPERATION OF THE ASSETS BY
PURCHASER AFTER THE CLOSING DATE OR IS AN ASSUMED LIABILITY.
b. Purchaser's and Xxxxxxxxx Indemnity: PURCHASER AND XXXXXXXXX JOINTLY AND
SEVERALLY AGREE TO BE RESPONSIBLE FOR AND HOLD HARMLESS AND INDEMNIFY SELLER AND
ITS OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, EMPLOYEES AND AGENTS FROM ANY
AND ALL CLAIMS ARISING FROM OR RELATING TO ANY BREACH OR VIOLATION OF THE
REPRESENTATIONS, WARRANTIES OR COVENANTS MADE BY PURCHASER OR XXXXXXXXX
CONTAINED IN THIS AGREEMENT, OR IN ANY CERTIFICATE, AGREEMENT, DOCUMENT OR
INSTRUMENT DELIVERED BY PURCHASER OR XXXXXXXXX PURSUANT TO THIS AGREEMENT OR THE
USE OR OPERATION OF THE ASSETS AFTER THE CLOSING DATE, EXCEPT TO THE EXTENT ANY
SUCH CLAIM ARISES FROM OR IS RELATED TO THE OWNERSHIP OR OPERATION OF THE ASSETS
BY SELLER ON OR PRIOR TO THE CLOSING DATE.
c. Definition: THE PARTIES EXPRESSLY INTEND AND AGREE THAT THE PHRASE "BE
RESPONSIBLE FOR AND HOLD HARMLESS AND INDEMNIFY," AS UTILIZED IN THIS AGREEMENT,
SHALL MEAN THAT THE INDEMNIFYING PARTY SHALL RELEASE, INDEMNIFY, HOLD HARMLESS
AND DEFEND THE INDEMNIFIED PARTY FROM AND AGAINST ANY AND ALL CLAIMS (INCLUDING,
BUT NOT LIMITED TO, PAYMENT OF REASONABLE ATTORNEY'S FEES, COSTS OF LITIGATION
AND COURT COSTS INCURRED BY THE INDEMNIFIED PARTY), WITHOUT LIMIT AND WITHOUT
REGARD TO THE CAUSE OR CAUSES THEREOF, INCLUDING PRE-EXISTING CONDITIONS,
WHETHER SUCH CONDITIONS BE PATENT OR LATENT, BREACH OF REPRESENTATION OR
WARRANTY (EXPRESS OR IMPLIED), STRICT LIABILITY, TORT, BREACH OF CONTRACT, OR
THE NEGLIGENCE OF ANY PERSON OR PERSONS, INCLUDING THAT OF THE INDEMNIFIED
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE, PASSIVE OR
GROSS, OR ANY OTHER THEORY OF LEGAL LIABILITY.
d. Survival: THE PARTIES EXPRESSLY INTEND AND AGREE THAT THE INDEMNITIES IN
THIS SECTION SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED HEREBY
WITHOUT LIMITATION.
e. Extension of Indemnities: ANY INDEMNIFYING PARTY'S OBLIGATIONS CONTAINED
IN THIS AGREEMENT SHALL EXTEND TO THE INDEMNIFIED PARTY AND ALSO TO ANY OF ITS
DIVISIONS, SUBSIDIARIES, AFFILIATED AND/OR PARENT COMPANIES, AND THE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, OWNERS, SHAREHOLDERS AND INSURERS OF EACH AND, IF
APPLICABLE, TO ANY ACTIONS AGAINST EITHER PARTY'S LEGAL AND BENEFICIAL OWNERS,
WHETHER IN REM OR IN PERSONAM.
f. Other Limitations: SELLER AND SHAREHOLDERS SHALL BE OBLIGATED TO
INDEMNIFY ANY PURCHASER INDEMNIFIED PARTIES WITH RESPECT TO ALL CLAIMS FOR WHICH
PURCHASER INDEMNIFIED PARTIES ARE ENTITLED TO INDEMNIFICATION UNDER THIS SECTION
18 ONLY UP TO $26 MILLION IN THE AGGREGATE (THE "INDEMNIFICATION CAP").
g. Exclusive Remedy: THE SOLE AND EXCLUSIVE LIABILITY AND RESPONSIBILITY OF
SELLER AND SHAREHOLDERS TO PURCHASER INDEMNIFIED PARTIES UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING FOR ANY
BREACH OF OR INACCURACY IN ANY REPRESENTATION OR WARRANTY OR FOR ANY BREACH OF
ANY COVENANT OR OBLIGATION OR FOR ANY OTHER REASON), AND THE SOLE AND EXCLUSIVE
REMEDY OF PURCHASER INDEMNIFIED PARTIES WITH RESPECT TO ANY OF THE FOREGOING,
SHALL BE AS SET FORTH IN SECTION 15 AND THIS SECTION 18.
h. EEX Indemnity: SELLER AND EACH SHAREHOLDER, JOINTLY AND SEVERALLY, WILL
INDEMNIFY AND HOLD HARMLESS PURCHASER AGAINST ANY OBLIGATION TO PAY PRINCIPAL OR
INTEREST ON THE EEX NOTE OTHERWISE THAN THROUGH THE PERFORMANCE OF DRILLING
SERVICES UNDER AND PURSUANT TO THE TERMS OF THE
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DRILLING CONTRACT (AS DEFINED IN THE RIG 19 AGREEMENT) AS THE DRILLING CONTRACT
AND RIG 19 AGREEMENT ARE IN EFFECT ON THE CLOSING DATE. SELLER AND THE
SHAREHOLDERS SHALL NOT BE OBLIGATED TO INDEMNIFY PURCHASER FOR ANY OBLIGATION TO
PAY THE EEX NOTE (a) THAT RESULTS SOLELY FROM ANY BREACH BY PURCHASER OR ITS
ASSIGNS OF THE DRILLING CONTRACT OR THE RIG 19 AGREEMENT OR (b) IF EITHER THE
DRILLING CONTRACT OR RIG 19 AGREEMENT IS AMENDED AFTER THE CLOSING DATE AND SUCH
AGREEMENTS AS AMENDED (i) REDUCE THE AGGREGATE AMOUNT CREDITED TO THE PAYMENT OF
THE EEX NOTE BELOW $4,000 PER DAY OR (ii) REDUCE THE MINIMUM NUMBER OF DAYS EEX
IS REQUIRED TO USE RIG 19 DURING THE TERM OF THE RIG 19 AGREEMENT; BUT IN THE
CASE OF CLAUSE (b), ONLY TO THE EXTENT SUCH REDUCTION IN AMOUNT OR IN THE
MINIMUM NUMBER OF DAYS REDUCES THE AMOUNT CREDITED OR WHICH WOULD BE CREDITED
TOWARD PAYMENT OF THE EEX NOTE PURSUANT TO THE RIG 19 AGREEMENT.
19. Non-Competition. In order to induce Purchaser to enter into this Agreement,
Seller and Shareholders, effective as of the Closing Date, for a period of five
years following the Closing Date, each agree that it will not, and will cause
each of its affiliates to not, without the consent of Purchaser, directly or
indirectly, provide contract land drilling services in the State of Texas and
all states contiguous thereto, (i) except for the account of Purchaser and its
affiliates, (ii) except for ownership in publicly traded companies of less than
5% of the outstanding common stock and (iii) except in the case of Crates
Xxxxxxxx Capital, Inc., CT Capital Partners, L.P. and CT Drilling Partners, L.P.
and their affiliates, ownership of not more than 10% of the equity securities of
an entity that is not controlled (within the meaning of rule 405 under the
Securities Act) by such Person. Seller and each Shareholder acknowledge that a
remedy at law for any breach or attempted breach of this Section 19 will be
inadequate and further agree that any breach of this Section 19 will result in
irreparable harm to Purchaser. Accordingly, Purchaser shall, in addition to any
other remedy that may be available to any of them, be entitled to specific
performance and injunctive and other equitable relief in case of any such breach
or attempted breach. Seller and each Shareholder acknowledge that this covenant
not to compete is being provided as an inducement to Purchaser to enter into
this Agreement, and that this Section 19 contains reasonable limitations as to
time, geographical area and scope of activity to be restrained that do not
impose a greater restraint than is necessary to protect the goodwill or other
business interest of Purchaser. Whenever possible, each provision of this
Section 19 shall be interpreted in such a manner as to be effective and valid
under applicable law but if any provision of this Section 19 shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remaining
provisions of this Section 19. If any provision of this Section 19 shall, for
any reason, be judged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Section 19 but shall be confined in its operation to the
provision of this Section 19 directly involved in the controversy in which such
judgment shall have been rendered. In the event that the provisions of this
Section 19 should ever be deemed to exceed the time or geographic limitations
permitted by applicable laws, then such provision shall be reformed to the
maximum time or geographic limitations permitted by applicable law.
20. Information Exchange. Seller will furnish Purchaser (i) access at any time
prior to the Closing Date to the manuals and maintenance and similar records in
Seller's possession or control relating to the Assets and (ii) within thirty
(30) days after the Closing Date, originals or copies of such manuals and
maintenance and similar records relating to the Assets. Seller represents that
the manuals and maintenance and similar records in Seller's possession or
control relating to the Assets are complete.
21. Conditions to Closing. The obligation of each of the parties to perform this
Agreement is contingent upon the following:
a. The representations, warranties, covenants and agreements of the other
party contained herein shall be true and correct in all material respects on the
Closing Date.
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b. The other party shall have duly performed in all material respects the
acts and undertakings to be performed by it hereunder on or prior to the Closing
Date.
c. No statute, rule or regulation or order of any court or administrative
agency shall be in effect which prohibits such party from consummating the
transactions contemplated hereby and no suit, action, investigation or other
proceeding by any third party or governmental entity shall have been instituted
or threatened seeking to enjoin, restrain or prohibit such party from
consummating the transactions contemplated hereby or to obtain substantial
damages in respect thereof, or which is related to or arises out of this
Agreement and the transactions contemplated hereby and which, in the reasonable
judgment of such party would make it inadvisable to consummate such
transactions.
d. The execution of a side agreement between Purchaser and Xxxxxxxxx and the
owners of the San Xxxxxx and Pleasanton yards providing Purchaser and Xxxxxxxxx
the right to use the yards at no cost for sixty (60) days after the Closing
Date.
For purposes of this Section 21, "other party" means, (i) with respect to
Seller, Xxxxxxxxx and Purchaser, and (ii) with respect to Xxxxxxxxx and
Purchaser, Seller and the Shareholders.
22. Closing Procedures. On the Closing Date, the following shall be delivered
(at the offices of Fulbright & Xxxxxxxx L.L.P. in Houston, Texas, or such other
location as mutually agreed to by Seller and Purchaser):
a. Seller shall deliver to Purchaser:
i. a duly executed Xxxx of Sale in a form which is consistent with this
Agreement and reasonably satisfactory to Purchaser, transferring to Purchaser
good and marketable title in and to the Assets, free and clear of any taxes,
liens and encumbrances (except the Contracts, the Rig 19 Agreement and liens
securing only Assumed Liabilities);
ii. duly executed consents to the assignment of the Contracts and the
Rig 19 Agreement in a form reasonably satisfactory to Purchaser;
iii. vehicle titles for each motor vehicle, if any, constituting a part
of the Tangible Assets and any other documents required to be executed by Seller
to consummate the transactions contemplated by this Agreement, which documents
shall be in a form reasonably acceptable to Purchaser, including without
limitation, (A) an opinion of Woerndle, Strain & Xxxxxx, L.L.P., counsel for the
Seller, relating to the due authorization, execution and delivery of this
Agreement and other transaction documents by, and enforceability of this
Agreement and other transaction documents and (B) customary officer's
certificates and Secretary's certificates; and
iv. the release of all liens and encumbrances, if any, covering the
Assets except rights under the Contracts and the Rig 19 Agreement to the extent
they may constitute liens or encumbrances on the Tangible Assets or liens
securing only Assumed Liabilities.
b. Purchaser and Xxxxxxxxx, as applicable, shall deliver to Seller:
i. immediately negotiable funds (or a portion thereof by check as
directed by Seller) in the amount of the Cash Purchase Price, which shall be
transmitted by bank wire to the accounts specified by Seller;
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ii. the certificates evidencing the Shares;
iii. the Warrants; and
iv. any other documents required to be executed by Purchaser or
Xxxxxxxxx to consummate the transaction contemplated by this Agreement
(including without limitation, an Assumption Agreement), which documents shall
be in a form reasonably acceptable to Seller.
23. Conduct of Business and Preservation of Assets.
a. Until the Closing, the parties hereto agree to cooperate with each other
to effect an orderly transition of the ongoing operation of the Assets and
Seller shall use commercially reasonable efforts to preserve, maintain and
protect the Assets from and after the date of this Agreement and until the
Closing Date, without the prior express written consent of Purchaser, neither
will:
i. make any material change in the conduct of the ongoing operation of
the Assets;
ii. enter into any new contracts with respect to the Assets;
iii. transfer, sell or otherwise convey or dispose of any Asset (other
than the utilization of inventory in the ordinary course of operating the Assets
and conducting the Seller's land drilling business consistent with past
practice);
iv. enter into any contract that would obligate Xxxxxxxxx or Purchaser
in any respect after the Closing;
v. waive any material rights under any Contract;
vi. except as provided on Schedule 6, move any Tangible Asset from its
location at the time of the inspection referred to in Section 6 above;
vii. mortgage, pledge or subject to any encumbrance or lien any of the
Assets;
viii. modify in any manner the terms of any Assumed Liability.
ix. authorize or agree in writing or otherwise take any of the
foregoing actions.
b. From and after the date of this Agreement and until the Closing Date,
Seller will:
i. use commercially reasonable efforts to preserve intact the current
business organizations of Seller, keep available the services of the current
officers, employees, and agents of Seller and maintain the relations and
goodwill with all suppliers, customers, licensors, licensees, landlords, trade
creditors, employees, agents, and others having business relationships with
Seller;
ii. confer with Purchaser concerning Seller's operational matters of a
material nature;
iii. maintain in full force and effect the same insurance Seller has
covering the Assets on the date of this Agreement. Seller has provided to
Purchaser a true and correct summary of the insurance in effect covering the
Assets.
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iv. maintain all the properties and assets of Seller's business and
operations of the Seller in the ordinary course consistent with past practice;
v. maintain Seller's books and records in the usual, regular and
ordinary manner, on a basis consistent with prior years;
vi. perform and comply with its obligations under all Contracts and in
the ordinary course of business consistent with past practice;
vii. promptly advise Purchaser of any change in circumstances which
arises prior to the Closing, which would make any representation or warranty of
Seller set forth in this Agreement untrue if such state of facts had existed on
the date of execution of this Agreement;
24. Notice. Any notice pursuant to this Agreement shall be in writing and shall
be deemed to be given as of the date facsimiled or three days after the date
deposited in the U.S. mail (certified, return receipt requested), in each case
addressed as follows:
a. If to Seller or Shareholders, to:
Xxxxxx Drilling Company
00 X. Xxxxxxxxxx
Xxxx Xxxxxx Xxx 0000
Xxx Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
CT Drilling Partners, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With copies to:
Woerndle, Strain & Xxxxxx, L.L.P.
000 X. Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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Xxxxx, Xxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Mr. F. Xxxxxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
b. If to Purchaser, to:
Xxxxxxxxx-UTI Energy, Inc.
0000 Xxxxxx Xxxxxxx
X.X. Xxx Xxxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
25. Limitation on Assignments. Notwithstanding any other provision hereof, this
Agreement shall neither constitute nor require an assignment to Purchaser of any
Contract or other right if an attempted assignment of the same without the
consent of any party would constitute a breach thereof or a violation of any law
or any judgment, decree, order, writ, injunction, rule or regulation of any
governmental entity unless and until such consent shall have been obtained. In
the case of any such Contract that cannot be effectively transferred to
Purchaser without such consent (a "Consent Required Contract"), Seller agrees
that between the date hereof and the Closing Date it will use reasonable
commercial efforts to obtain or cause to be obtained the necessary consents to
the transfer of each Contract. Xxxxxxxxx and Purchaser agree to cooperate with
the Seller in obtaining such consents and to enter into such arrangement of
assumption as may be reasonably requested by the other contracting party under a
Contract. In the event that the Seller shall have failed prior to the Closing
Date to obtain consents to the transfer of any Contract and Xxxxxxxxx and
Purchaser shall have waived the conditions set forth in Section 22.a.ii, the
terms of this Section 25 shall govern the transfer of the benefits of each such
Contract. The Seller and Xxxxxxxxx and Purchaser shall use their reasonable
commercial efforts after the Closing Date to obtain any required consent to the
assignment to, and assumption by, Purchaser of each Contract that is not
transferred to Purchaser at the Closing (a "Nonassigned Contract"). With respect
to the Nonassigned Contracts that are not assignable by the terms thereof or
consents to the assignment thereof cannot be obtained as provided herein, such
Nonassigned Contracts shall be held by Seller in trust for Purchaser and shall
be performed by Purchaser in the name of Seller, at Purchaser's sole cost, risk
and expense, and all benefits and obligations derived thereunder shall be for
the account of Purchaser; provided, however, that where entitlement of Purchaser
to such Nonassigned Contracts hereunder is not recognized by any third party,
Seller shall, at the request of Purchaser, enforce in a reasonable manner, at
the cost of and for the account
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of Purchaser, any and all rights of the Seller against such third party.
Purchaser and Xxxxxxxxx shall indemnify Seller in respect of Purchaser's
performance or failure to perform any obligation, duty or liability in
connection with such Nonassigned Contracts (in addition to any other
indemnification obligation, if any, of Xxxxxxxxx and Purchaser under Section 18
of this Agreement).
26. No Negotiation. After this Agreement is executed and until such time, if
any, as this Agreement is terminated pursuant to Section 29, Seller and the
Shareholders will not, nor will it permit any of their respective
representatives to, directly or indirectly, solicit, initiate or encourage any
inquiries, offers or proposals from, discuss or negotiate with or execute any
agreement with or provide any information to, any person or entity (other than
Purchaser) relating to any transaction involving the sale of the Assets
(collectively, "Sale Proposals"), or any other transaction the consummation of
which would or could reasonably be expected to impede, interfere with, prevent
or materially delay the transactions contemplated by this Agreement or that
could reasonably be expected to materially dilute the benefits to Xxxxxxxxx or
Purchaser of the transactions contemplated by this Agreement. If any such
inquiries or Sale Proposals are received by, or any such information is
requested from, or any such negotiations or discussions are sought to be
initiated with Seller, Seller will promptly notify Purchaser of the nature,
terms and status of the foregoing and the identity of the inquiring party and
provide Purchaser with a copy of all written materials provided in connection
with such Sale Proposal. After this Agreement is executed and until such time,
if any, as this Agreement is terminated pursuant to Section 29, Seller will not
accept any Sale Proposal from any Person or entity other than Purchaser.
27. Public Statements and Confidentiality. Any public announcement or similar
publicity with respect to this Agreement or the transactions contemplated by
this Agreement will be issued, if at all, at such time and in such manner as
Xxxxxxxxx determines after consultation with Seller.
28. Financial Statement Cooperation. If requested, Seller agrees to cooperate
with Purchaser and to assist Purchaser's and Xxxxxxxxx'x outside auditors in the
preparation of any audited financial statements relating to the Assets or Seller
that are required to be filed by Purchaser with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, or the Securities
and Exchange Act of 1934, as amended. The cost and expenses associated with the
audit of such financial statements, and any out-of-pocket costs of Seller
incurred in assisting Purchaser and Xxxxxxxxx in preparing such audited
financial statements, will be paid by Purchaser and Xxxxxxxxx.
29. Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
a. by mutual written consent of Xxxxxxxxx, Purchaser and Seller;
b. by Xxxxxxxxx, Purchaser and Seller, if there shall be any statute, rule
or regulation that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or a governmental entity shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby, and such order, decree, ruling or other action shall have
become final and nonappealable;
c. by Xxxxxxxxx and Purchaser, if
i. the Closing shall not have occurred by January 31, 2002 (provided
that the right to terminate this Agreement under this clause (i) shall not be
available to Xxxxxxxxx and Purchaser if Xxxxxxxxx'x and Purchaser's failure to
fulfill any of their respective obligations under this Agreement or their
misrepresentation or breach of any warranty hereunder has been the sole cause
thereof);
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ii. there has been a material breach by Seller or the Shareholders of
any covenant, or a material inaccuracy of any representation or warranty, of
Seller or the Shareholders contained in this Agreement that has rendered the
satisfaction of any condition to the obligations of Xxxxxxxxx or Purchaser
impossible and such breach or inaccuracy has not been (A) cured by Seller within
ten Business Days after receipt of notice thereof from Xxxxxxxxx or Purchaser or
(B) waived by Xxxxxxxxx and Purchaser; or
iii. there shall occur an event that results in or would reasonably be
expected to result in an adverse effect on the Assets exceeding $100,000
(without considering any insurance proceeds, or rights thereto); provided this
shall not apply if Seller corrects all damage or defects prior to the Closing
Date.
d. by the Seller, if
i. the Closing shall not have occurred by January 31, 2002 (provided
that the right to terminate this Agreement under this clause (i) shall not be
available to the Seller if due to the failure of Seller or the Shareholders to
fulfill any of its obligations under this Agreement or if due to Seller's or
Shareholders' misrepresentation or breach of any warranty hereunder has been the
sole cause thereof);
ii. there has been a material breach by Xxxxxxxxx or Purchaser of any
covenant, or a material inaccuracy of any representation or warranty, of
Xxxxxxxxx or Purchaser contained in this Agreement that has rendered the
satisfaction of any condition to the obligations of the Seller impossible and
such breach or inaccuracy has not been (A) cured by Xxxxxxxxx or Purchaser
within ten Business Days after receipt of notice thereof from Seller or (B)
waived by the Seller;
30. Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 29 by Xxxxxxxxx or Purchaser or by the Seller, written
notice thereof shall forthwith be given to the other parties specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall become void and have no effect, and there shall be no liability hereunder
on the part of Xxxxxxxxx or Purchaser or the Seller or any of their respective
directors, officers, employees, stockholders or representatives, except that the
agreements contained in this Section 30 and in Sections 17, 18, 27, 31.a, 32,
33, 34 and 36 shall survive the termination hereof. Nothing contained in this
Section 30 shall relieve any party from liability for damages actually incurred
(excluding consequential damages) for breach of any covenant, or for the
inaccuracy of any representation or warranty, contained herein.
31. Commissions, Fees, Taxes Release of Liens.
a. Indemnity for Broker's Fees and Commissions: Purchaser on the one hand
and Seller and the Shareholders on the other each agrees to be responsible for
and hold harmless and indemnify the other against all Claims arising out of or
in connection with any broker's fees or commissions alleged to have been
incurred by such party. Seller and each Shareholder expressly acknowledges and
agrees that neither the Purchaser nor Xxxxxxxxx have any liability or obligation
to Xxxxxxx Xxxxx & Associates, Inc. in connection with this Agreement or the
transactions contemplated hereby, and they will indemnify and hold Purchaser and
Xxxxxxxxx from any such claim. Seller agrees to pay all brokerage and other fees
owed to Xxxxxxx Xxxxx & Associates at the time of closing.
b. Taxes: Seller agrees to be responsible for and hold harmless and
indemnify against all Claims relating to the imposition of federal, state or
local ad valorem, income or franchise taxes applicable to the ownership or
operation of the Assets prior to the Closing Date or their transfer from Seller
to Purchaser.
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32. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Texas, without regard to conflict of
laws.
33. Convenience of Forum; Consent to Jurisdiction. The parties to this Agreement
hereby consent and subject themselves to the jurisdiction of the United States
District Court for the Northern District of Texas, and in the event such court
is not available to the parties, to the courts of the State of Texas located in
Dallas County, Texas, with respect to any matter arising under this Agreement.
Service of process, notices and demands of such courts may be made upon any
party to this Agreement by personal service at any place where it may be found
or giving notice to such party as provided in this Agreement.
34. Enforcement of the Agreement. The parties hereto agree that irreparable
damage would occur if any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
35. Change of Name. Within five days after the Closing, Seller agrees to change
its name so that it no longer uses the word "Drilling".
36. Miscellaneous. This Agreement contains the entire understanding of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements between the parties with respect thereto. No person except
Seller or the Shareholders, or the Holders of Registerable Securities with
respect to Section 13 through 16 only, shall have any rights or remedies under
this Agreement. This Agreement may be executed by facsimile and simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same agreement.
(SIGNATURES BEGIN ON FOLLOWING PAGE)
-20-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
multiple copies, each of which shall be deemed an original hereof.
XXXXXXXXX-UTI ENERGY, INC.
By:
-------------------------------------
--------------------
--------------------
--------------------
XXXXXXXXX-UTI DRILLING COMPANY LP, LLLP
By: XXXXXXXXX-UTI (GP) LLC
By:
-------------------------------------
--------------------
--------------------
--------------------
XXXXXX DRILLING COMPANY
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CRATES XXXXXXXX CAPITAL, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-21-
CT CAPITAL PARTNERS, L.P.
By: CT Capital GenPar, L.P., its General
Partner
By: Crates Xxxxxxxx Capital, Inc.,
its General Partner
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
CT DRILLING PARTNER, L.P.
By: CT Drilling GenPar, L.L.C., its
General Partner
By: CT Capital GenPar, L.P., Member
By: Crates Xxxxxxxx Capital, Inc.,
its General Partner
By:
--------------------------
Name:
------------------------
Title:
-----------------------
----------------------------------------
Xxxx X. Xxxxxx
-22-
EXHIBIT A
ASSET LISTING
-23-
EXHIBIT B
CONTRACTS
-24-
ATTACHMENT A
FORM OF WARRANT
-25-
SCHEDULE 1(d)
ASSUMED PROMISSORY NOTE
-26-
SCHEDULE 6
TANGIBLE ASSETS MOVED SUBSEQUENT TO INSPECTION
Rig 1 Released 12/18/01 at Tema Oil & Gas Company, Xxxxxxxx County Moving
next to Xxxxx Exploration, Xxxxxxxx County after 12/31/01
Rig 3 Released 12/18/01 at EEX, Lone Oak #4, Val Verde County Moving next
EEX, Xxxxxxxxx 78 #6 Xxx Verde County on 12/31/01
Rig 7 Released some time after 12/25/01 at Rio Tex, Hutto #1, Real County
Waiting on location for Rio Tex, Xxxxxxxxxx Lease, Xxxxxxx County
Rig 10 Moving 12/19/01 to Discovery Operating, Cochise #2, Xxxxxxx County
Scheduled to spud 12/26/01
Rig 15 Released at Strand Energy, Xxxxxxx #1, Fort Bend County Waiting on
weather to move to Xxxxxx Production, Cinco Ranch 190-1, Ft. Bend
County, scheduled 12/27/01
Rig 16 Released at Alpine Resources Vastar #4, Xxxxxx County Waiting on
weather to move to Strand Energy Genmi #1, Xxxxxx County, scheduled
12/29/01
Rig 18 Moved 12/17/01 to Tech Resources, Farmco #1, Frio County Spud on
12/18/01
Rig 19 TD and logging, EEX Xxxxx #1, Ft. Bend County Projected to move to EEX,
Xxxxx County, starting 12/27/01
-27-
SCHEDULE 10(c)
CONSENTS
NONE
-28-
SCHEDULE 10(e)
LIENS
NONE
-29-
SCHEDULE 10(h)
OUTSTANDING LITIGATION, CLAIMS, ETC.
NONE
-30-
SCHEDULE 10(m)
ASSETS RETAINED BY SELLER
1. 1994 Ford Explorer s/n: 1FMDU32XORUA86784 (Xxxxx Xxxxxxx, Controller's
company car)
2. 2000 Ford Expedition s/n: FMRU15L3YLB25424 (Office manager's car)
3. Located at 00 X. Xxxxxxxxxx, Xxx Xxxxxx, Xxxxx: All office equipment,
including, but not limited to, telephone equipment, copiers, computers,
printers, modems, computer network equipment, file cabinets, typewriters,
calculators, adding machines, fax machines, desks, chairs, sofas, tables,
artwork and other decor; all intellectual property, including, but not limited
to, software licenses; all business records, including, but not limited to,
accounting records, tax returns and files; all office supplies; all kitchen
equipment and supplies, including, but not limited to, microwave ovens, coffee
makers, refrigerators and utensils.
4. Located at 0000 X. Xxxx Xxxxxx, Xxx Xxxxxx, Xxxxx: All office equipment,
including, but not limited to, telephone equipment, copiers, computers,
printers, modems, computer network equipment, file cabinets, typewriters,
calculators, adding machines, fax machines, desks, chairs, sofas, tables,
artwork and other decor; all intellectual property, including, but not limited
to, software licenses; all business records, including, but not limited to,
accounting records, tax returns and files; all office supplies; all kitchen
equipment and supplies, including, but not limited to, microwave ovens, coffee
makers, refrigerators and utensils.
5. Located at 00 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxx: All office equipment,
including, but not limited to, telephone equipment, copiers, computers,
printers, modems, computer network equipment, file cabinets, typewriters,
calculators, adding machines, fax machines, desks, chairs, sofas, tables,
artwork and other decor; all intellectual property, including, but not limited
to, software licenses; all business records, including, but not limited to,
accounting records, tax returns and files; all office supplies; all kitchen
equipment and supplies, including, but not limited to, microwave ovens, coffee
makers, refrigerators and utensils.
6. Located at 000 X. Xxxxxxx, Xxxxxxxxxx, Xxxxx: All office equipment,
including, but not limited to, telephone equipment, copiers, computers,
printers, modems, computer network equipment, file cabinets, typewriters,
calculators, adding machines, fax machines, desks, chairs, sofas, tables,
artwork and other decor; all intellectual property, including, but not limited
to, software licenses; all business records, including, but not limited to,
accounting records, tax returns and files; all office supplies; all kitchen
equipment and supplies, including, but not limited to, microwave ovens, coffee
makers, refrigerators and utensils.
-31-
SCHEDULE 10(n)
LAND DRILLING ASSETS OF KAC EQUIPMENT LEASING, INC.
Truck 18: 1981 Western Star S/N 0XXXXXXX0XX000000
Truck 19: 1981 Kenworth S/N 0XXXX00X0XX000000
Truck 20: 1979 Kenworth S/N 906067C
Trailer 37: 1982 Xxxxxxxx Lowbed S/N 0X000000XX0000000
1988 Trail King 4 axle detachable trailer S/N S0483CJM120308
1979 Peterbilt Bed truck VIN 112299P
1990 Freightliner S/N 0XXXXXXX0XX000000
1981 Autocar Truck VIN 0XXXXXXX0XX000000
1981 Xxxx Truck VIN 0X0X000X0XX000000
22-6.75" Drill collars
22-6.5" Drill collars
Truck 35: 1989 International F9370 S/N 0XXXXXXX0XX000000
-32-
